Despite challengers, Western companies are eager to stay in Nigeria. (image: greenpeace.org.uk)

Somehow, Nigeria’s oil industry has somehow become even more complicated.

The race to control the world’s oil resources has heated up as China has ambitiously entered the contest to win leases in Nigeria, putting Western firms on notice. And, at the same time, the Nigerian government has discussed imposing new taxes and fees on companies seeking to renew their leases, according to an article in Sunday’s Wall Street Journal.

According to the Journal, China’s state-owned Cnooc oil company was approached by a Nigerian “middleman” who inquired if the company was interested in taking leases held by Western companies such as Chevron, Shell, and Exxon once they expire. Cnooc has allegedly declined this offer, fearing reprisals from the more established companies it may need to partner with in the future. China does have a presence in Nigeria, as it co-owns an offshore oil field with France’s Total SA.

China, due to its fast-growing economy, has a pressing need to obtain oil reserves. Through its state- owned firms, China has been purchasing oil assets from companies and other governments, as detailed here on HeatingOil.com earlier in November.

This, along with proposed legislation that would increase the amount of royalties the government would receive from oil production totals, has pressured the major Western oil companies to sign renewal contracts before the Nigerian oil business changes. Exxon has already done so, inking 20-year extensions for three of its licenses. Shell and Chevron also hope to renew and are currently in discussions with the Nigerian government to do so.

In addition to the political jockeying, oil firms in Nigeria have also had to deal with security threats. Militants from the Niger Delta, home to the country’s oil reserves, have waged battle against the government amid claims that not enough money has gone back to the region. Militants associated with MEND, the Movement for Emancipation of the Niger Delta, have kidnapped oil company employees and have attacked oil pipelines and other key parts of the industry’s infrastructure. As a result, Nigeria—long Africa’s oil leader—now ranks behind Angola as Africa’s second leading producer.

In an attempt to mediate the situation, and very possibly to get in the good graces of both the government and MEND as it negotiates its renewal deal, Shell has launched a training and rehabilitation program for the area’s militants who have laid down their arms in the tenuous ceasefire.

What happens in Nigeria can have a direct impact on the lives of heating oil consumers. Threats to the country’s oil infrastructure often equates to questions about the world’s oil supply. And most times there are worries about the supply of oil, the market responds by hiking up prices.